Higher-than-expected U.S. inflation data could potentially push gold prices down
Market Update
Gold prices rose on Thursday as investors turned their attention to upcoming U.S. economic indicators, eagerly anticipating the impact of the data on potential interest rate changes by the Federal Reserve. In the UAE, gold prices also saw an increase, with various carat types experiencing a slight uptick.
On a global scale, spot gold prices increased by 0.28 percent to $2,315.41 per ounce, while U.S. gold futures saw a marginal 0.03 percent increase to the same price level.
U.S. Economic Data and Gold Prices
As investors await the release of U.S. economic data, particularly the weekly jobless claims report, the University of Michigan’s consumer sentiment reading, and the consumer price index data in the upcoming week, analysts are expressing caution in the gold market. There is anticipation surrounding the U.S. inflation report and concerns that if the inflation data exceeds expectations, gold prices could potentially drop to $2,290, with a further decline to $2,240 if the lower threshold is breached.
Additionally, Susan Collins, President of the Federal Reserve Bank of Boston, highlighted the need for a period of moderation in the U.S. economy to achieve the desired 2 percent inflation target.
Factors Influencing Gold Prices
Traders are closely monitoring the likelihood of a Federal Reserve interest rate cut, with the CME’s FedWatch Tool indicating a 66 percent probability of a rate cut in September. Lower interest rates tend to reduce the opportunity cost of holding gold, impacting market dynamics and providing support to gold prices.
The World Gold Council (WGC) emphasizes the strength of gold prices in the face of geopolitical uncertainties, citing central bank demand, investor interest in East Asia, and geopolitical factors as key supports for the precious metal.
Performance of Other Precious Metals
Alongside gold, spot platinum saw a 0.81 percent increase to $979.62, palladium rose by 0.36 percent to $955.25, and spot silver experienced a 0.69 percent increase to $27.53.
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